House Price Dips and What It Means for Buyers

, by Matt Stevens

The past couple of years have been quite tumultuous for the UK economy, with this turmoil almost resulting in a recession. In turn, the mortgages and housing market has likewise experienced such uncertainty recently.

One current consequence is that house prices have dipped substantially, so does this mean that it’s a good opportunity for buyers to get a spot on the property ladder? Throughout this article we’ll explain everything you need to know about the situation.

Are house prices falling in 2023?

Simply put, yes, house prices have shown dramatic decreases throughout 2023. Nationwide has reported that the average UK property price was down by a total of 5.3% in the year to August 2023.

Month on month, house prices have dropped by 0.8% to ultimately sit 5.3% below the peak during this time last year. The average value of a house now stands at £259,153, as compared to being £273,753 12 months ago. This marks the biggest annual decline in house prices since the global financial crisis of 2009.

Why have house prices dipped?

So, why exactly have house prices dipped? Well, there’s a few contextual factors which have evidently had a direct impact on the average property value. These include, firstly, the fact that the cost of living crisis has caused inflation to rise, and so things like food and services are now generally more expensive than they used to be. Followingly, people’s tighter budgets mean they are not in a position to comfortably save up funding for a home.

Secondly, by the same token, rising costs such as energy bills have made it so that some people are now unable to meet their usual monthly mortgage repayments, forcing them to sell their homes. Subsequently, an increased supply of properties onto the market paired with decreased demand (due to unaffordability) is causing all house prices to drop.

Thirdly, house prices throughout the UK rose extremely fast in the aftermath of the pandemic, consequently meaning that this collective dip could be a “correction”. Lastly, and perhaps most importantly, interest rates have shot up. In fact, since 2021, the Bank of England has increased its base rate a staggering 14 times consecutively from a record low of 0.1% up to 5.25%, thereby increasing mortgage rates and causing a large degree of borrowing ineligibility.

Should I buy a house now or wait?

So, considering the present fluctuations in house prices, is now a good time to buy a house, or should you instead wait? The answer depends on your specific financial situation and circumstances, but here are some aspects to consider.

Namely, both further property price drops and base rate increases are expected to occur, although this can’t be said for certain. However, if this does indeed happen, then the initial cost for a house may be lower, but it’s possible that you’d lose out financially in the long-term. Moreover, while house prices have experienced sharp decreases, it remains that they are still almost 20% higher than they were prior to the pandemic.

Having said this, the alternative, i.e., renting, is not financially prudent at the moment. While it used to be a common strategy to rent so as to save for a sizable mortgage deposit, rental costs have now become prohibitively high and do not represent a long-term investment such as a mortgage does. This is particularly true in London, where monthly rents can exceed £1500.

Therefore, whether you’re a first-time buyer or not who is looking to secure a property, then now certainly isn’t the worst time to get a mortgage since house prices have, all things considered, dropped a lot. Furthermore, if you were to opt for a variable-rate mortgage, then you’d eventually enjoy interest rate decreases in the future if they did go down.

We at The Mortgage Genie have helped many of our UK clients to secure a mortgage recently, and easily see the amount of opportunity that’s on the market for prospective buyers currently. We have the experience to ensure that you get a product which makes sense for you, as well as to guide you through the entire process. If you’re in need of a team of expert mortgage brokers, then be sure to get in touch with us at 01915809890 today. And why not see how much you could borrow up to right now by using our mortgage calculator?

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The Mortgage Genie Limited is Registered in England and Wales with Company Number 9803176. The Mortgage Genie Limited is an Appointed Representative of PRIMIS Mortgage Network, a trading name of First Complete Ltd. First Complete Ltd is authorised and regulated by the Financial Conduct Authority. Most Buy-to-Let Mortgages are not regulated by the Financial Conduct Authority. The guidance contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.


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